DJs sales up after nearly two years, but CEO expects a “flat” Christmas

Despite recording a slight uptick in sales for the first quarter of the new financial year, David Jones is still struggling in the electrical category, and CEO Paul Zahra is not holding out hope for Christmas, predicting that sales will be “flat” for the usually busy period.

David Jones released its 1Q13 results yesterday, posting a marginal 0.3 per cent increase in both total and like-for-like sales, resulting in only $1.3 million more entering the retailer’s coffers compared to last year.

Yesterday’s foray into the black followed seven consecutive quarterly sales results releases that saw David Jones floundering in the red. The retailer has not reported positive sales since November 2010 – a time when the company had only just reached a settlement regarding sexual harassment allegations that claimed the scalp of former CEO Mark McInnes.

In yesterday’s results release statement, DJs CEO Paul Zahra was upbeat for the most part, until it came to speaking about the electrical category.

“We have seen a continued improvement in sales tracking quarter on quarter since 1Q12,” he said. “Particularly pleasing is the fact that our high margin categories (womenswear, menswear, beauty, accessories and shoes) all delivered positive sales growth in the quarter.

“Our home and electrical categories on the other hand continued to be challenging.”

In the release he was also positive about the end of the year, saying he was “pleased to report that we are well prepared across our stores and our online and mobile business channels, for the all important Christmas and subsequent clearance periods”.

However, speaking to The Australian newspaper, Zahra was not so cheery.

“We’re planning for a flat Christmas,” he told The Australian, adding that the David Jones was “experiencing significant decline” in the electrical category, which was “outweighing” other high-margin departments in the store.

“The designer and luxury end of our business is doing exceptionally well, it’s in significant double-digit growth, and the contemporary or youth end is also in significant and double-digit growth.

“It’s the mainstream customer that is more concerned about the future…they’re much more conservative,” he said. “We’re seeing them shop with us less, but they’re probably not shopping anywhere.”

Despite the negativity, a few highlights were pulled out in the company’s results, including the trialling of a new point of sale (POS) system which is set to be fully rolled out by July 2013, as well as the launch of a new “webstore” incorporating a “new magazine application specifically designed for iPads, a mobile transaction site and an integrated corporate site”.